Inside The Corporation: Russia's Power Elite

Putin and one member of his inner circle, First Deputy Prime Minister Sergei Ivanov (epa)
October 15, 2007 (RFE/RL) -- In his mission to restore Russia's pride and prestige, President Vladimir Putin has repackaged the Soviet national anthem, reinvented patriotic pro-Kremlin youth groups, and revived the cult of the suave KGB officer.

But despite bringing back these old archetypes, Putin isn't interested in a Soviet restoration. This time around, Russia's path to greatness lies in a modern authoritarian corporate state. Some Kremlin-watchers have even dubbed the country's Putin-era ruling elite "Korporatsiya," or "The Corporation."

"I like using the term 'Kremlin, Inc.,'" says Russia analyst Nikolas Gvosdev, a senior fellow at the Nixon Center. "I think there are a number of boardroom strategies that apply to how policy in Russia is developed."

Since coming to power nearly eight years ago, Putin has carefully crafted an image of himself as the undisputed master of Russia's political universe: a strong, stern, and solitary leader calling all the shots. His most recent moves -- unexpectedly naming the heretofore unknown Viktor Zubkov as prime minister and announcing that he will lead the pro-Kremlin Unified Russia candidate list in December's parliamentary elections -- have only served to solidify this impression.

But in reality, Russia is run by a collective leadership -- the Kremlin Corporation's board of directors, so to speak. Putin is the front man and public face for an elite group of seasoned bureaucrats, most of whom are veterans of the KGB and hail from the president's native St. Petersburg. Together, they run Russia and control the crown jewels of the country's economy.

All key political decisions in Russia, including Putin’s most recent bombshells, are the result of deliberation and consensus among members of a tight-knit inner sanctum many analysts have dubbed "the collective Putin.”

"These are people who have been with Putin from the very beginning," says Olga Kryshtanovskaya, director of the Center for Elite Studies at the Russian Academy of Sciences Institute of Sociology. "Together they thought up this model of the state and government that is in place now."

All are KGB veterans, all are in their mid-50s, and all are St. Petersburg natives. Moreover, Kryshtanovskaya says, this group is ideologically "completely homogenous" and its members view strategy for Russia's development "in exactly the same way."

At the heart of that strategy is the establishment of an enduring political system -- a centralized, authoritarian, vertically integrated and unitary executive that can manage a thorough and comprehensive modernization of Russia.

"They want an authoritarian modernization. They want a strong authoritarian state of the Soviet type without the Soviet idiocy," says Kryshtanovskaya. "The idiotic Soviet economy and the idiotic Soviet ideology were minuses. All the rest they want to bring back and preserve: a state system without a separation of powers."

If they succeed, the West and the world will be dealing with an even more undemocratic, assertive, and aggressive Russia for a long time to come.

Such a Russia would probably cease to even pretend to adhere to democratic norms at home, and would most likely abandon any facade of being a reliable partner of the West in international affairs. It would become more brazen about bullying neighbors, using their dependence on Russia's energy resources as leverage. The Kremlin would continue to try to undermine democratic reform in places where it has taken hold on Russia's borders, like Georgia and Ukraine, and strenuously oppose such liberalization elsewhere in the former Soviet space.

But to establish their vision of modern superpower greatness, the "collective Putin” first must make sure they remain in power after the March 2008 presidential elections. And this means keeping the group cohesive, managing personal, political, and commercial conflicts among its members, and preventing any one faction in the ruling elite from becoming too powerful. For Putin, this means a delicate balancing act -- and one that he seems singularly equipped to perform.

The Indispensable Putin

As his presidency winds down, Putin isn't acting like somebody who is preparing to go quietly into retirement.

Speaking to a group of Western academics in September, Putin said he planned to remain influential in Russian politics after his presidency ends next year. And in a speech to the pro-Kremlin Unified Russia party on October 1, he gave the clearest indication yet about how he plans to do so.

Putin announced plans this month to lead Unified Russia's candidate list (RFE/RL)

Putin told cheering delegates that he would head the party's list of candidates for December's elections to the State Duma and that he would consider becoming prime minister in the future. The move sparked a wave of speculation that a new, powerful, super-prime minister's office would soon displace the presidency as Russia's key power center.

Whether or not this is indeed the plan, analysts agree that Putin is the indispensable man in Russia's political system.

If Putin wants the system he created to remain in place and develop according to his wishes, he has little choice but to stay in the game -- if for no other reason than to prevent open clan warfare from breaking out in the ruling elite.

"It is clear that some of the prerogatives Putin enjoys are because of who he is as a person, not because of the presidential chair," says Gvosdev. "The worry is that there will be someone else sitting in that presidential chair who doesn't have the same level of trust, isn't able to mediate," he adds.

And there is quite a bit to mediate.

Corporate Power, Political Clashes

In addition to wielding near-absolute political power, Putin’s inner circle, or board of directors, also controls the commanding heights of the Russian economy.

Sechin, for example, is chairman of Rosneft, Russia's massive state-run oil company. Sergei Ivanov heads the newly formed aircraft-industry monopoly United Aircraft Company. Viktor Ivanov chairs the board of directors of both Almaz-Antei, a state missile-production monopoly, and Aeroflot, the national airline. Patrushev's son Andrei is an adviser to Rosneft's board of directors, and his other son, Dmitry, is vice president of the state-run bank Vneshtorgbank.

Just below the top tier of the Putin elite is a group of leading officials who, while not enjoying the same influence and access as the president's inner sanctum, are nevertheless considered key players in the system whose interests must be taken into account.

Among them are Vladimir Yakunin, the chairman of Russian Railways; Viktor Cherkesov, the head of the Federal Antinarcotics Agency; Sergei Chemezov, general director of the arms export monopoly Rosoboroneksport; and First Deputy Prime Minister Dmitry Medvedev, who is also chairman of Gazprom’s board of directors.

Other key figures include Yury Kovalchyuk, chairman of the board of directors of Bank Rossiya; Aleksandr Grigoryev, director of Gosrezerv, the state reserve agency; Dmitry Kozak, the regional development minister (and former presidential envoy to the Southern Federal District, which includes Chechnya and the remaining North Caucasus republics); and Deputy Prime Minister Sergei Naryshkin, who is chairman of the board of the Channel One television station and deputy chairman of Rosneft.

Such a concentration of commercial and political might has led to conflicts, despite the group's ideological homogeneity. This has been most visible recently in Cherkesov's long-standing and bitter feud with Patrushev and Sechin, which went public in early October. Cherkesov has long coveted Patrushev's post as FSB chief. Patrushev and Sechin are wary of Cherkesov's rising clout and Sechin and Sergei Ivanov are also fierce rivals for Putin’s ear and influence in the Kremlin.

Sechin's interests as Rosneft chairman have also clashed with those of Medvedev's at Gazprom. A proposed merger between the two state-controlled behemoths was abandoned in 2005 due to rivalries between the two men's power bases in the Kremlin. The two sides also clashed over the division of the bankrupted Yukos oil company's production assets -- the majority of which were eventually acquired by Rosneft.

Sechin's interests also clash with Yakunin's at Russian Railways -- mainly over whether oil will be transported by pipeline or rail.

"They have problems among themselves," says Vladimir Pribylovsky, head of the Moscow-based Panorama think tank. "They are afraid of each other. They are seeking somebody they can trust with the throne. Everybody trusts Putin. They don't know what will happen with his successor," Pribylovsky adds.

Top-Down Governance

Putin’s Moscow-based team sits atop what Russians call the power vertical, a sprawling pyramid of political and economic might that stretches deep into the country's far-flung regions and republics.

Provincial governors are appointed by the president, and confirmed by elected local legislatures -- which in turn are dominated by Unified Russia. Presidential representatives with sweeping authority keep governors and local officials loyal to the Kremlin line.

Those who cross "The Corporation" can expect to feel the full weight of Russia's heavily politicized law-enforcement bodies. For those who are ready to play ball with the Kremlin, however, there are spoils.

Through the governors and presidential prefects, the Kremlin controls a vast network of patronage that Kryshtanovskaya calls "a hierarchy that resembles the Soviet state nomenklatura," in which the Communist Party would dole out coveted posts, privileges, and favors to loyal members.

Putin’s emerging nomenklatura has a distinctive KGB flavor. According to Kryshtanovskaya's research, 26 percent of Russia's senior bureaucrats and business leaders are siloviki -- veterans of the security services or military structures. If the 1990s were dominated by robber-baron oligarchs, then the reigning figure of this decade, according to political scientist Daniel Treisman, a Russia expert at UCLA, is the "silovarch."

Putin’s authority, his inner circle's preeminence, and their common plan to remake Russia all rests on the savvy management of the corporate, political, and personal conflicts inherent in this vast power pyramid, and on Kremlin Inc.'s board of directors remaining cohesive.

If any of the current schisms escalates into open conflict, the system could descend into crisis.

Putin "has created a situation that functions poorly without him. And he needs to continue with this system because are no alternatives," says Moscow-based political analyst Dmitry Oreshkin. "In the framework of this Putin consensus, he now needs to make sure nobody becomes too strong, so that nobody gathers sufficient resources to seize control of the vertical."

Andropov's Children

Shortly after becoming president in 2000, Putin saw to it that a plaque honoring Yury Andropov was restored to the Moscow house where the late Soviet leader and KGB chief once lived.

And in June 2004, to mark the 90th anniversary of Andropov's birth, Putin arranged to have a 10-foot statue of him erected in Petrozavodsk, north of St. Petersburg.

That Putin should take such care to honor the last KGB man to become Kremlin leader is not surprising. In many ways, Putin and his inner circle are Andropov's children.

Putin, Patrushev, Cherkesov, Sergei Ivanov, and Viktor Ivanov all entered the KGB in the mid-1970s when Andropov was at the spy agency's helm. They were strongly influenced by his ideas.

"They thought he was simply a genius, that he was a very strong person who, if he had lived, would have made the correct reforms," Kryshtanovskaya says.

Andropov, who led the KGB from 1967 until 1982 when he became Soviet leader, sought to modernize the Soviet economy to make it more competitive with the West, while at the same time preserving an authoritarian political system in which the KGB would have a leading role. The authoritarian modernization he envisioned, Kryshtanovskaya says, resemble the one that carried out by China's Communist leaders.

"Andropov thought that the Communist Party had to keep power in its hands and to conduct an economic liberalization. This was the path China followed," Kryshtanovskaya says. "For people in the security services, China is the ideal model. They see this as the correct course. They think that Yeltsin went along the wrong path, as did Gorbachev."

Andropov died in 1984, less than 15 months after becoming Soviet leader, and was never able to implement his modernization plan. But two decades after his death, the group of fresh-faced KGB rookies he once inspired are poised to implement it for him.

Operation Successor And Beyond

Speculation is rampant over how Putin’s power will manifest itself next. Will he step straight from the presidency into a new, more powerful prime ministerial post? Or will he temporarily hand over power to a weak and loyal president before reclaiming the post at a later date? No matter the formula, analysts agree that the current elite will remain in power beyond 2008 -- and the current elite along with him.

Putin, says Andrei Ryabov of the Moscow Carnegie Center, "is the undisputed leader of this team, and since there are no serious independent candidates to compete for that role, this means that he will be the main director and architect of the new composition" of political power.

Beyond 2008, analysts say Putin and his team are considering major changes in Russia's political system to minimize the risk of succession crises in the future.

"The dilemma of the succession of power is one of the main problems facing the authorities since it always causes a crisis," says Kryshtanovskaya. "They find troublesome direct elections in which all the people vote. They need either indirect elections through some kind of electors or assembly, or a change in the character of the power structures."

This, of course, would require a major constitutional overhaul. But Dmitry Oreshkin notes that, given the dominant position Putin’s board of directors enjoys, that would not be much of an obstacle.

"Right now this group of people can do anything," he says. "In this situation, who has the resources to oppose them or to disrupt their plans?"